- On April 1, 2021
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- CEO, increase efficiency, reduce cost, reduce waste, sustainability
Sustainability in Manufacturing
Creating sustainable business practices in the manufacturing industry has a plethora of benefits to consumers and corporations alike. Customers are increasingly connected, informed, and concerned about the environment, social justice, and ethical sourcing. Companies with transparent supply chains and production processes that portray responsible, sustainable manufacturing excel far beyond their competitors. Furthermore, sustainable production processes provide significant cost savings for businesses. One of the leading areas where small and midsize manufacturers can increase sustainability is waste reduction.
The new legislation, pressure from consumers, and overall corporate responsibility all reduce waste to the forefront for business leaders. According to Gartner, 35% of companies still lack formal corporate supply chain sustainability goals, while another 49% of respondents said their companies did have such plans (1). This is starting to change as businesses begin to realize the benefits of sustainability to their bottom line and productivity. Most supply chain leaders are planning to invest in waste reduction, ethical sourcing, water-efficiency improvements, and carbon emissions over the next year and a half, with waste reduction and water-efficiency seen to have the greatest fiscal benefits (1). CEOs and business leaders in small and midsize companies need to set clear, achievable sustainability goals and ensure that each department is doing its part.
How Small and Midsize Business Leaders Can Reduce Industrial Waste
To reduce manufacturing waste effectively, you must first appropriately identify areas of waste and their causes. Full visibility into your business practices and your entire supply chain can help you pinpoint exactly where, how, and when waste is created and reveal opportunities for waste to be reduced or for byproducts to be reused or sold. Running operational audits can also help you pinpoint inefficiencies that may lead to wasted time, labor and materials.
There are multiple types of waste in manufacturing, and often, waste in one area results in waste in another. Common types of waste include:
- Inventory waste: Inventory waste occurs when manufacturers have too many raw ingredients, overproduce a particular product, items become outdated, or manufacturers do not have use for specific items. This type of waste is widespread in the food and beverage industry, where spoilage is common. Improper storage methods for perishables can also lead to wasted ingredients. Inventory waste is especially costly since the waste is multifaceted, including the items’ cost, production cost, and storage costs. Proper inventory management and real-time updates to your inventory and batch locations help to eliminate inventory waste.
- Excessive production: Overproduction waste occurs when manufacturers create too much of a particular product for the level of demand. This type of waste is more familiar with products that expire or are quickly outdated, like food, pharmaceuticals, or fast fashion. Demand forecasting allows you to pull from historic data, current market trends, and existing orders to plan efficient production.
- Time and labor: Overproduction, rework, and inefficient processes can lead to wasted time and labor. This not only affects your bottom line but also has an impact on employee satisfaction and retention.
- Defect waste: Mistakes in production or poor-quality control can result in defective products. This creates waste and may even result in product recalls, which involve even more time, money, and labor to conduct. Visibility into your production processes and standardizing operations allows you to ensure product quality and consistency.
The United States produces around 236 million tons of municipal solid waste every year. While the numbers for industrial waste are not precise, some estimates go as high as 7.6 billion tons produced annually (2). Manufacturing business leaders have a great responsibility to identify areas where waste can be reduced and set clear, traceable sustainability goals for their team.
Learn more on how to decrease waste in the manufacturing industry: https://softengine.com/resources/whitepaper/manufacturing-waste/
Learn more on how to decrease waste in the food and beverage industry: https://softengine.com/resources/whitepaper/food-waste/